The Paycheck Protection Program may not protect nearly enough paychecks.
While some major banks are struggling to implement a system through which small businesses affected by COVID-19 can apply for a loan under the program, others appear to be already out of money. On Sunday, Wells Fargo & Company said it has “reached its capacity of $10 billion to lend under the PPP.” The bank has only been focusing on nonprofits or companies with 50 employees or less, the statement read. Here’s the gist:
“Given the exceptionally high volume of requests we have already received, we will not be able to accept any additional requests for a loan through the Paycheck Protection Program. We will review all expressions of interest submitted by customers via our online form through April 5 and provide updates in the coming days.”
The federal program, which went live only on Friday, earmarks $349 billion for businesses with 500 employees or less, which are supposed to be able to apply for forgivable loans of up to $10 million to be spent on payroll and other qualifying expenses. It was part of the $2 trillion stimulus package signed into law last week.
Some financial institutions, like JPMorgan Chase, have admitted that they’re not quite ready to participate as they digest guidance from the federal government regarding how to comply. Wells Fargo appears to be the first major institution to throw up its hands and admit it has already run out of money, although it almost certainly won’t be the last. On Twitter, the bank is telling would-be applicants that it is no longer accepting new loan requests due to the “overwhelming volume of requests we’ve already received,” and is referring people to the Small Business Administration for additional resources.
Small businesses across the country have been shuttered for weeks in the wake of the coronavirus pandemic, with many saying they may not be able to reopen once the shutdown orders end. Most states still have no clue when it will be safe to restart their economies and let businesses open their doors.
This post has been updated with additional details from Wells Fargo’s statement.